HALF-YEAR REPORT 2018 ENABLE EVOLVE EXPAND EVOLVE … · 2019-11-22 · orders in the food and...

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HALF-YEAR REPORT 2018

KEY FIGURES

in CHF million, unless otherwise indicated

01.01.– 30.06.2018

01.01.– 30.06.2017 Change in %

Incoming orders / net salesTotal incoming orders 324.6 244.5 32.8

Rollers 54.7 53.5 2.2Drives 84.4 71.7 17.7Conveyors & Sorters 71.4 51.1 39.7Pallet & Carton Flow 30.2 27.0 11.9Total net sales 240.7 203.3 18.4

ProfitabilityEBITDA 35.5 29.6 19.8in % of net sales 14.8 14.6EBITA 28.6 23.8 20.3in % of net sales 11.9 11.7EBIT 25.3 20.5 23.2in % of net sales 10.5 10.1Net profit 18.6 15.3 21.5in % of net sales 7.7 7.5

Cash flowOperating cash flow 31.2 17.6 77.1in % of net sales 13.0 8.7Free cash flow 18.0 8.2 119.5in % of net sales 7.5 4.0Total investments / capital expenditure 15.6 9.7 60.8

Balance sheet 30.06.2018 31.12.2017Total assets 397.7 355.3 11.9Goodwill 17.6 17.6 0.0Net financial assets 33.9 37.1 –8.6Equity 260.1 261.7 –0.6Equity ratio (equity in % of assets) 65.4 73.6Return on equity (in %) 14.2 15.8 –10.1

Other key figuresRONA (return on net assets, in %) 15.6 16.5 –5.5Average number of employees 2,140 2,067 3.5Net sales per employee (in CHF thousand) 225 218 3.2Productivity (added value / total personnel expenses) 2.07 2.02 2.5

ABOUT INTERROLL 4

INTERROLL ON THE CAPITAL MARKET 5

REPORT BY THE BOARD OF DIRECTORS AND GROUP MANAGEMENT 6

FINANCIAL POSITION, EARNINGS AND CASH FLOWS 8

PRODUCT GROUPS 10

REGIONS 14

INTERIM FINANCIAL STATEMENTS OF INTERROLL GROUP 17

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 17

CONSOLIDATED INCOME STATEMENT 18

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 19

CONSOLIDATED STATEMENT OF CASH FLOWS 20

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 21

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS 22

BASIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 22

SEGMENT INFORMATION 24

NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION 25

NOTES TO THE CONSOLIDATED INCOME STATEMENT 26

NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS 27

NOTES TO THE CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 27

FURTHER DISCLOSURES AND INFORMATION 27

FINANCIAL CALENDAR 2019 28

CONTACT AND IMPRINT 28

4ABOUT INTERROLL

ABOUT INTERROLL

The Interroll Group is a leading global provider of material handling solutions. The company was founded in 1959 and has been listed on the SIX Swiss Exchange since 1997. Interroll provides system integrators and OEMs with a wide range of platform-based products and services in these catego-ries: Rollers (conveyor rollers), Drives (motors and drives for conveyor systems) and Conveyors & Sorters, as well as Pallet & Carton Flow (flow storage systems). Interroll solutions are used in express and postal services, e-commerce, airports, the food and beverage industry, fashion, and automotive sectors, and many other manufacturing industries. Among the end users are leading brands such as Amazon, Bosch, Coca-Cola, DHL, Nestlé, Procter & Gamble, Siemens, Walmart and Zalando. Headquartered in Switzerland, Interroll has a global network of 32 companies with sales of CHF 450.7 million and around 2,100 employees (2017).

www.interroll.com

28,000CUSTOMERS AROUND THE WORLD

32 COMPANIESAROUND THE WORLD

2,100EMPLOYEESAROUND THE WORLD

INTERROLL PRODUCT GROUPS

ROLLERS CONVEYORS & SORTERSDRIVES PALLET & CARTON FLOW

5INTERROLL ON THE CAPITAL MARKET

Share price performance of Interroll relative to Swiss Performance Index SPI / SXGE

Interroll share Share price as at 31 Dec. 2017: CHF 1,443.00 Share price as at 29 June 2018: CHF 1,740.00

SPI / SXGE

SWISS STOCK MARKETS IN THE REDThe Swiss stock markets have lost ground since 2018 began. Trading conflict between the United States (US) and China, new sanctions for Russia and Iran, nuclear discussions with North Korea and anti-European banter in individual European Union (EU) states have unsettled investors.

The Swiss Market Index (SMI) blue-chip barometer stood at 8,609 points at the end of June. This repre-sented a decrease of 8.5 %.

The broad Swiss Performance Index (SPI) fell to 10,327 points, 4.2 % below the end of 2017.

INTERROLL SHARE ON THE RISE AGAINThe performance of individual listed stocks varied greatly, however. Numerous project orders, innovative products and services as well as consistent cost and investment management were the company-specific growth drivers of the Interroll Group in the first half of 2018.

The Interroll share once again performed much more strongly than the previous year.

The closing price of CHF 1,740.00 on 29 June 2018 meant the Interroll share was 20.6 % higher than at the end of 2017 (CHF 1,443.00).

The Interroll share therefore once again outperformed the Swiss indices and the Group’s market capitalisation reached nearly CHF 1.5 billion.

LITTLE CHANGE IN FREE FLOATAround 19 % of Interroll shares (31 December 2017: 20 %) are held by the remaining founding families. The free float as defined by the SIX Swiss Exchange there-fore stood at 81 % as of 29 June 2018 (31 December 2017: 80 %).

INTERROLL ON THE CAPITAL MARKET

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15%

25%

30%

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FebruaryJanuary March April Mai June

CHF1,443.00

CHF1,740.00

6REPORT BY THE BOARD OF DIRECTORS AND GROUP MANAGEMENT

Dear shareholders, valued customers, employees and business partners,

The Interroll Group has started 2018 very positively and has even increased the great momentum of the previous year. Thanks to an extremely large number of orders and significant improvements in net sales, earnings and cash flow, the success of the growth strat-egy has been driven forward in the first six months of 2018. All regions and product groups have experienced growth in comparison to the same period in the pre-vious year. It is pleasing to see purely organic growth here, created by our own efforts.

Incoming orders rose organically by 32.8 % in the first six months to a new record value of CHF 324.6 million (previous year: CHF 244.5 million). This was 27.4 % in local currency. Included in the orders received are follow-up orders for crossbelt sorters for a packaging and logistics provider in the United States (US), as well as a major order from Korea for a customer from the e-commerce sector for modular conveying platforms – each in the low tens of millions.

Net sales grew organically by 18.4 %, reaching a new consolidated company record of CHF 240.7 million (previous year: CHF 203.3 million). The sales growth amounted to 13.4 % in local currency.

SELECTIVE EXPANSION OF CAPACITYInterroll's business growth is based on innovations that were successfully introduced in the market during the last few years and is facilitated by the global e-com-merce trend, as well as post and logistics providers’ high demand for efficient conveyor technology solu-tions. Our global activities are also generating many orders in the food and beverage industry, in the airport construction sector (including passenger screening) and other areas. Growth in the Asian region has been disproportionately strong.

Our expansion in the market is accompanied by neces-sary selective expansion of capacity, as a result of which the sites in Wermelskirchen, Germany and Hiram (Atlanta, US) have been expanded. A testing facility has been purchased at the Baal site in Germany. A factory of our own is currently under construction in Thailand. Thanks to local production, from 2019 this will enable Interroll to serve the fast-growing markets in Southeast Asia more comprehensively and more quickly than is currently the case.

DISCIPLINED COST AND INVESTMENT MANAGEMENTWe want to be pioneers in our field for Logistics 4.0. We are making this happen within the company not only by increasingly digitalizing our business proce-dures and production processes, but also by investing in the automation of our plants. As an enabler, it is our job to facilitate planning, installation, maintenance and modernization for our customers and end users

INTERROLL ACHIEVES STRONG ORGANIC GROWTH

Paul Zumbühl, Chief Executive Officer

7REPORT BY THE BOARD OF DIRECTORS AND GROUP MANAGEMENT

with our platform products and control systems as well as through increased system availability. We are, therefore, offering solutions for decentrally controlled conveyors and expanding our range of services, such as those for operation and after sales. To consolidate our position of technological leadership, we are budgeting in the current year as much as an extra CHF 5 million for research and development costs.

Despite higher research and development expenditure, Interroll increased its EBITDA in the first six months of the year by 19.8 % to CHF 35.5 million (previous year: CHF 29.6 million). The EBITDA margin was 14.8 % (previous year: 14.6 %). The EBIT rose by 23.2 % to CHF 25.3 million (previous year: CHF 20.5 million). The EBIT margin was 10.5 % (previous year: 10.1 %).The net profit increased by 21.5 % to CHF 18.6 million (previous year: CHF 15.3 million). The net profit mar-gin reached 7.7 % (previous year: 7.5 %).

The intensive project activity in the Group came to the fore at the half-year point in high inventory levels and customer downpayments on the balance sheet. The operating cash flow has increased by 77.1 % to CHF 31.2 million (previous year: CHF 17.6 million). Gross investment reached CHF 15.6 million and has thereby increased significantly in comparison to the previous year (CHF 9.7 million) by CHF 5.9 million. Free cash flow more than doubled and was at CHF 18.0 million (previous year: CHF 8.2 million).

PROMOTING PARTNER AND EMPLOYEE KNOWLEDGEThe partners in our Rolling on Interroll (ROI) program continue to appreciate our extensive expertise and pro-ject-based market experience. The partner program now comprises 73 small and medium-sized enterprises from 36 countries, with whose support we are contin-uing to develop a common vision of material flow in the future and intensifying our efforts to increase value added for our customers on all continents.

Interroll's global success depends entirely on our employees and mutual, intensive, fruitful teamwork with our customers. The Interroll Academy plays an increasingly important role in reaching our long-term goals in knowledge sharing and exchanging expertise, both in internal programs and in customer training courses and events.

Sant'Antonino, 3 August 2018

Urs Tanner, Chairman of the Board of Directors

“ Our business growth is based on innovations that were successfully introduced in the market.”

Urs Tanner Chairman of the Board of Directors

Paul Zumbühl Chief Executive Officer

FINANCIAL POSITION, EARNINGS AND CASH FLOWS


8

All amounts in CHF million

NET SALES EBITDA AND EBITDA MARGIN

OPERATIONAL CASH FLOW

EQUITY AND EQUITY RATIO

NET PROFITEBIT AND EBIT MARGIN

2014

2014

2014

2015

2015

2015

240.7

2016

2016

2016

2017

2017

2017

2018

2018

2018

203.329.6

14.6 %

35.514.8 %

20.510.1 %

25.310.5 %

15.37.5 %

18.67.7 %

231.269.5 %

260.165.4 %

17.6

31.2

2014

2014

2014

2015

2015

2015

2016

2016

2016

2017

2017

2017

2018

2018

2018

9

INCOMING ORDERS AND NET SALES ARE REACHING RECORD LEVELS In the first half of 2018, the Interroll Group saw a record number of incoming orders amounting to CHF 324.6 million (previous year: CHF 244.5 mil-lion). In local currencies, the Group grew by 27.4 %. The exclusively organic growth in the reporting cur-rency reached 32.8 % and was driven by the increasing product business and a strong demand for projects, particularly in the areas of packaging and express ser-vices, airports, and the food and beverage industries. This meant that the orders received for the Asia region were able to grow by a significant 68.4 %.

At CHF 240.7 million (previous year: CHF 203.3 mil-lion), the consolidated net sales also reached a record level and saw purely organic growth of 18.4 % in the reporting currency. In local currencies, the Group grew by 13.4 %. Particularly strong sales increases was registered in the Asia region (39.1 %).

RESULTS GROWING DISPROPORTIONATELYDespite higher research and development expenditure, Interroll increased its EBITDA in the first six months of the year by 19.8 % to CHF 35.5 million (previous year: CHF 29.6 million). The EBITDA margin was 14.8 % (previous year: 14.6 %). The EBIT rose by 23.2 % to CHF 25.3 million (previous year: CHF 20.5 million). The EBIT margin was 10.5 % (previous year: 10.1 %).

The net profit increased by 21.5 % to CHF 18.6 million (previous year: CHF 15.3 million). The net profit mar-gin reached 7.7 % (previous year: 7.5 %).

SOLID DEVELOPMENT OF THE BALANCE SHEET, STRONG CASH FLOWThe balance sheet total grew by June 30, 2018 to CHF 397.7 million and was therefore 11.9 % above the figure recorded at the end of 2017 (CHF 355.3 million). The equity capital is CHF 260.1 million, while the equity ratio is 65.4 % (December 2017: 73.6 %).

The intensive project activity in the Group came to the fore at the half-year point in high inventory levels and customer downpayments on the balance sheet.

The operating cash flow increased by 77.1 % to CHF 31.2 million (previous year: CHF 17.6 million).

Gross investment reached CHF 15.6 million and has thereby increased significantly in comparison to the previous year (CHF 9.7 million) by CHF 5.9 million. In particular, the Hiram/Atlanta site in the United States has been expanded and work has begun on a new site in Phan Thong (Bangkok area) in Thailand.

In light of the significantly higher cash flow and despite higher investments, the free cash flow more than doubled and reached CHF 18.0 million (previous year: CHF 8.2 million).


STRONG CASH FLOW DEVELOPMENT

As announced at the financial media conferences in March 2017 and 2018, Interroll will use its solid financial position to spend up to an additional CHF 5 million on research and development this year. In doing so, the Group aims to bolster its technology and innovation leadership in material handling t echnology for Logistics 4.0, too.

10PRODUCT GROUPS

ROLLERS PRODUCT GROUP

Th e “Rollers” product group forms the basis of the Interroll portfolio. Interroll was producing conveyor rollers in Wermelskirchen, Germany, as early as 1959, and now manufactures them at fi ve additional loca-tions. Th is makes Interroll the leading provider in this area. Conveyor rollers are used in countless internal logistics applications.

Extremely short delivery times, highly effi cient manu-facturing processes, customer proximity and the high quality of Interroll products also made a signifi cant contribution to further growth in the fi rst half of the year. Th is growth is supported by the rising level of automation of particularly suitable production steps.

In addition, we anticipated and took advantage of the potential of market trends and the continued strong development of e-commerce and investments in mod-ernization and outsourcing. Th e Americas region showed a temporary declining trend, while the Europe, the Middle East and Africa (EMEA) and Asia-Pacifi c regions reported solid growth.

Th e higher number of “Rollers” orders in Th ailand (up 20.9 % year on year) was particularly encouraging. Th ailand will be home to Interroll’s third local Center of Excellence in the Asia-Pacifi c region; the center is currently under construction and will be completed by the spring of 2019.

At CHF 54.7 million, consolidated net sales exceeded the already high CHF 53.5 million achieved in the same period of the previous year by 2.2 %. At CHF 55.7 million, consolidated order intake increased 1.0 % on the previous year’s high level.

STRONG PRODUCT BUSINESS, GREAT POTENTIAL IN DEMAND FOR PROJECTS

Interroll has split its service portfolio into the four product groups “Rollers,” “Drives,” “Pallet & Carton Flow” and “Conveyors & Sorters.” In the fi rst half of 2018, order intake and net sales in all product groups were up year on year. “Conveyors & Sorters” and “Drives” experienced particularly strong growth of 39.7 % and 17.7 % respectively.

Interroll rollers stand for top quality in 60,000 variants.

11PRODUCT GROUPS

DRIVESPRODUCT GROUP

Th e “Drives” product group portfolio includes driven conveyor rollers (Volt RollerDrive), control systems and drum motors. Th e global Centers of Excellence in Baal, Germany and Hvidovre, Denmark have world-wide responsibility for drum motors within the Inter-roll Group.

Here, sales amounted to CHF 84.4 million, and were thus 17.7 % higher year on year (CHF 71.7 million). Consolidated order intake increased by 16.3 % to CHF 87.8 million compared to CHF 75.5 million in the same period of the previous year.

Th e EMEA and Asia-Pacifi c regions performed espe-cially strongly. Drum motors recorded sales increases of 16.3 %. Here too, the Asia-Pacifi c region experi-enced an encouraging rise of 30.0 % year on year. In “RollerDrive,” China had a 62.5 % higher order intake than in the fi rst half of 2017.

Th e RollerDrive is not only energy effi cient but also generates considerably less noise than comparable products. In March 2018, Interroll launched additional models from the new generation of drum motors on the European market: the DM 0113 and DM 0138. Th e innovative motor platform, which is predominantly used for modern conveyor systems in goods distribu-tion centers, in production, and in the food industry, has a fully modular design and includes both synchro-nous and asynchronous drive solutions.

Interroll’s fl exible, easy-to-install solutions play a lead-ing role worldwide. Th e increasing use of drives in the new Modular Conveyor Platform (MCP) allows even greater synergy between Interroll’s individual product groups.

Interroll’s drum motors and RollerDrive family as well its controls comply with the very highest efficiency requirements.

“RollerDrive,” China had a 62.5 % higher order intake than in the fi rst half of 2017.

12PRODUCT GROUPS

PALLET & CARTON FLOW PRODUCT GROUP

The “Pallet & Carton Flow” product group provides flow storage solutions for pallets and container pack-aging based on the first in, first out (FIFO) or last in, first out (LIFO) principles. Within Interroll, the global Center of Excellence in La Roche-sur-Yon, France is responsible for this product group.

In the first half of 2018, Interroll recorded an increase of 11.9 % in consolidated sales in this product group, from CHF 27.0 million in the prior-year period to CHF 30.2 million.

Consolidated order intake also increased by a sub-stantial 19.1 % to CHF 34.1 million (previous year: CHF 28.6 million). The Americas region reported strong growth of 28.4 %, while demand from the EMEA region showed significant recovery, improv-ing by a considerable 56.7 % in the first half of 2018.

When it comes to warehouses with high turnover rates, flow storage solutions prove to be particularly cost-effective in the long term. The Interroll flow storage solution was tested in the Interroll test center in La Roche-sur-Yon. Following 50,000 test cycles under extreme conditions, Interroll guarantees a long lifetime and maximum safety. Interroll sees major market potential in expanding its range with partially or fully automated solutions and is preparing for fur-ther enhancements.

Flow storage solutions from Interroll are robust and safe.

13PRODUCT GROUPS

CONVEYORS & SORTERS PRODUCT GROUP

The “Conveyors & Sorters” product group comprises sorter and conveyor solutions developed by the global Centers of Excellence in Sinsheim, Germany and Cañon City, US. These include crossbelt sorters, belt curves, and the MCP. With its products and solutions in this segment, Interroll enjoys a strong position par-ticularly when it comes to supplying equipment for airports, mail and logistics distribution centers, e-com-merce and, increasingly, the tire industry.

Since March 2018, Interroll has also offered a deep-freeze version of its MCP. In addition, the prototype for a new Spiral Lift was presented for the first time at the LogiMAT in March 2018 and has been commer-cially available since July 2018.

In the first half of 2018, this product group achieved consolidated sales of CHF 71.4 million, which was an increase of 39.7 % year on year (CHF 51.1 million). Order intake increased strongly by 72.5 % to CHF 147.0 million, compared to CHF 85.2 million in the prior-year period.

In the first half of 2018, Interroll concluded follow-up orders to supply equipment to the distribution centers of a leading parcel delivery company in North Amer-ica. In Europe, too, numerous orders were placed in the mail and logistics fields as well as the food and beverage industry. In Asia, Interroll concluded a fol-low-up order with record volumes. Here, Interroll will supply a record number of conveyor modules with a total length of 12 km as well as eight Spiral Lifts for the customer’s distribution center in South Korea.

Modern material flow systems can be planned quickly and with ease thanks to Interroll’s modular concept: Customers can make further modifications and implement these themselves during assembly. Inter-roll’s drive solutions are creating systems that boast maximum availability and energy efficiency as well as extremely low operating and maintenance costs. This is true of both new systems and modernized existing systems.

Interroll’s Modular Conveyor Platform (MCP) opens up a wide range of flexible application options. Since March 2018 it has also been available as a solution for deep-freeze environments.

14REGIONS

REGION WITH STRONG GROWTHIn the Europe, Middle East and Africa (EMEA) region, the strong organic growth of recent years continued into the fi rst half of 2018. Incoming orders increased by 34.6 % compared to the previous year, reaching CHF 182.8 million. At CHF 146.1 million, turnover was 17.1 % higher than the previous year (CHF 124.8 million).

Th e driving force behind this development has been a high demand for rollers, drives and conveyor systems. While central, eastern and southern Europe were able to improve on their respective previous year’s orders

once again, western Europe recovered aft er a diffi cult previous year. Positive signs, albeit from a lower level, can also be seen in the orders received in Africa and the Middle East.

Comprising 61 % of Interroll’s total turnover, EMEA continues to be the most economically important region within the Group. Th e technical requirements for suppliers in internal logistics are high and, in addi-tion to lasting customer relationships, industry knowl-edge and technical solution expertise, they demand innovative responses to increasing complexity and new developments.

SUSTAINABLE GROWTH IN ALL REGIONS

By opening up new markets and gaining new customers, we have continued with our globalization strategy in the fi rst half of 2018. Interroll has been able to achieve growth in incoming orders and net sales in all regions.

We can clearly see strong trends with the orders that are coming in: Th e Asia region increased orders by 68.4 %, Europe, the Middle East and Africa (EMEA) by 34.6 % and the Americas by 14.5 %.

At the end of the fi rst half of the year, Interroll’s share of total sales in EMEA is 61 %; in the Americas it is 26 % and in Asia-Pacifi c it is 13 %. Th e company has exceeded its own expectations in the area of Courier, Express and Parcel – also in conjunction with the growing e-commerce sector.

EUROPE, MIDDLE EAST, AFRICA (EMEA)

In March of this year, Interroll presented technical innovations such as the Spiral Lift, its extensive expertise in the sector, and its high quality with regard to the production and sales process at the international logistics trade fair LogiMAT in Stuttgart, Germany.

+34.6 %ORDER INTAKE

+17.1 %NET SALES

EMEA

15REGIONS

REGION WITH ACTIVE PROJECT ACTIVITYThe sales in the Americas region were CHF 63.9 mil-lion and were therefore 13.3 % higher than in the previous year (CHF 56.4 million). The lion’s share of this development was made up of the North Ameri-can market, with the United States (US) at the top of this. This is where Interroll has been able to see fur-ther growth. The reason for this positive development is the continuing strong demand in courier, express, parcel (CEP), food and distribution centers. In the US, Interroll further expanded its capacities at the Hiram/Atlanta site in Georgia during the reporting period.

Incoming orders, which increased by 14.5 % to CHF 87.3 million, are making a key contribution to success in the region. Interroll has received a large follow-up order amounting to the low tens of millions for a lead-

ing logistics and packaging provider in the US. These new orders include delivering sorter systems. The new orders were placed in addition to the large orders that were announced by the company back in May 2017. The sorter systems ordered in 2018 are being installed mainly in new installations, for example in two of the customer’s distribution centers in two of its largest US hubs.

The delivery of sorters to the Brazilian postal service has continued into the reporting year. With an excel-lent local team, Interroll is committed to long-term customer relationships in the challenging yet promis-ing Brazilian market.

AMERICAS

In April, Interroll presented all of its product groups in an impressive manner at the MODEX in Atlanta.

+14.5 %ORDER INTAKE

+13.3 %NET SALES

AMERICAS

16REGIONS

REGION WITH HIGH GROWTH PROSPECTSInterroll’s sales in the first half of 2018 saw strong growth in the Asia-Pacific region with 39.1 %, reaching CHF 30.7 million (previous year’s period: CHF 22.1 million) at the end of the first six months of this year.

In contrast, however, the CHF 32.6 million worth of orders received in the previous year grew by a signifi-cant 68.4 % to a new record level of CHF 54.7 million in total.

Receiving a large order for Modular Conveyor Plat-forms (MCP) and Spiral Lifts in the low tens of mil-lions CHF contributed significantly to this. The order came from a South Korean e-commerce company. Interroll will supply and install a record number of conveying modules with a total length of 12 km, as well as eight Spiral Lifts for the customer’s distribution center in South Korea. Strengthening the customer’s intra logistics capacities should equip the customer to

better deal with upcoming seasonal peaks during the Korean autumn festival and the Christmas season. It is expected that the installation work will be completed in 2018. The order for Interroll follows a previously successfully installed project in one of this customer’s distribution centers in 2017.

The demand for Interroll technology in this region has shown a particularly positive development in the areas of “Rollers” and “Drives.”

As in previous years, China was the most important market for Interroll in the region. As such, it was able to achieve further growth and a good level of incoming orders. Positive impetus also came from Thailand and South Korea, where the growth trend also continues with a high number of incoming orders.

The region is also increasingly benefiting from the glo-balization of the Interroll Group with the foundation of its own production facilities on-site. The success-ful integration of the regional Interroll Competence Centers in Suzhou and Shenzhen into the production network guaranteed consistently positive synergistic effects in the first half of 2018, too, thanks to the higher level of on-site technical expertise and closer proximity to customers.

ASIA-PACIFIC

+68.4 %ORDER INTAKE

+39.1 %NET SALES

ASIA-PACIFIC

Interroll is also consistently implementing its product strategy in Asia. At the AUTOMACH fair in Thailand in March 2018, Interroll demonstrated its increased market proximity in Southeast Asia.

17STATEMENT OF FINANCIAL POSITION

1 INTERIM FINANCIAL STATEMENTS OF INTERROLL GROUP

1.1 Consolidated statement of financial position

in thousands CHF 30.06.2018 in % 31.12.2017 in % ASSETSProperty, plant and equipment 114,784 109,770 Intangible assets 34,908 36,852 Financial assets 700 1,864 Deferred tax assets 8,881 3,758 Total non-current assets 159,273 40.0 152,244 42.8 Inventories 88,700 60,957 Current tax assets 1,144 1,595 Trade and other accounts receivable 97,659 103,236 Cash and cash equivalents 50,946 37,307 Total current assets 238,449 60.0 203,095 57.2 Total assets 397,722 100.0 355,339 100.0 EQUITY AND LIABILITIESShare capital 854 854 Share premium 8,161 7,902 Reserve for own shares –14,030 –8,695 Translation reserve –47,264 –46,221 Retained earnings 312,426 307,840 Total equity 260,147 65.4 261,680 73.6 Financial liabilities 19 19 Deferred tax liabilities 3,493 99 Pension liabilities 8,353 8,149 Provisions 8,864 8,107 Total non-current liabilities 20,729 5.2 16,374 4.6 Financial liabilities 16,997 193 Current tax liabilities 12,767 15,952 Trade and other accounts payable 61,250 47,820 Advances received from third party 25,831 13,320Total current liabilities 116,845 29.4 77,285 21.8 Total liabilities 137,575 34.6 93,659 26.4 Total liabilities and equity 397,722 100.0 355,339 100.0

18CONSOLIDATED INCOME STATEMENT

1.2 Consolidated income statement

in thousands CHF

Jan.–Jun. 2018 in %

Jan.–Jun. 2017 in % Variance in %

Net sales 240,734 100.0 203,276 100.0 37,458 18.4 Material expenses –110,116 45.7 –83,787 41.2 Personnel expenses –70,137 29.1 –64,207 31.6 Increase / (Decrease) in work in progress, finished products and own goods capitalised 14,812 6.2 6,569 3.2 Other operating expenses –41,314 17.2 –33,675 16.6 Other operating income 1,538 0.6 1,471 0.7 Operating result before depreciation and amortisation (EBITDA) 35,517 14.8 29,647 14.6 5,870 19.8 Depreciation –6,869 2.9 –5,829 2.9 Operating result before amortisation (EBITA) 28,648 11.9 23,818 11.7 4,830 20.3 Amortisation –3,387 1.4 –3,306 1.6 Operating result (EBIT) 25,261 10.5 20,512 10.1 4,749 23.2 Financing expenses –883 0.4 –827 0.4 Financing income 150 0.1 75 0.0 Financing result –733 0.3 –752 0.4 19 –2.5 Result before income taxes 24,528 10.2 19,760 9.7 4,768 24.1 Income tax expense –5,965 2.5 –4,485 2.2 Result 18,563 7.7 15,275 7.5 3,288 21.5 Result attributable to:

– Non-controlling interests – – Owners of Interroll Holding Ltd. 18,563 7.7 15,275 7.5 3,288 21.5

Values per share (in CHF) Non-diluted earnings (result) per share 21.87 17.94 3.93 21.9 Diluted earnings (result) per share 21.87 17.94 3.93 21.9

19CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

1.3 Consolidated statement of comprehensive income

in thousands CHF

Jan.–Jun. 2018

Jan.–Jun. 2017

Result 18,563 15,275 Other income Items that in the future may be reclassified subsequently to income statetement

– Currency translation differences –1,043 –2,605Total items that in the future may be reclassified subsequently to income statetement –1,043 –2,605 Other income –1,043 –2,605 Comprehensive income 17,520 12,670 Result attributable to:

– Non-controlling interests – Owners of Interroll Holding Ltd. 17,520 12,670

20CONSOLIDATED STATEMENT OF CASH FLOWS

1.4 Consolidated statement of cash flows

in thousands CHF

Jan.–Jun. 2018

Jan.–Jun. 2017

Result 18,563 15,275 Depreciation, amortisation and impairment 10,255 9,135Loss/(gain) on disposal of tangible and intangible assets 3 –3Financing result, net 734 752Income taxes 5,964 4,485Changes in inventories –28,919 –15,049Changes in trade and other accounts receivable 4,690 –1,664Changes in trade and other accounts payable, advances 26,773 10,508Changes in provisions, net 1,234 552Income taxes paid –10,393 –8,542Personnel expenses on share-based payments 1,561 2,240Other non-cash expenses/(income) 771 –48Cash flow from operating activities 31,236 17,641 Acquisition of property, plant and equipment –14,162 –7,915Acquisition of intangible assets –1,423 –1,741Acquisition of financial assets –34 –12Proceeds from disposal of property, plant and equipment and intangible assets 980 128Settlement of loans receivable 1,214 3Interests received 145 69Cash flow from investing activities –13,280 –9,468 Free cash flow 17,956 8,173 Dividends –13,977 –13,619Acquisition of own shares –6,638 –3,181Proceeds from financial liabilities 17,000 3,000Repayment of financial liabilities –195 –55Interests paid –24 –12Cash flow from financing activities –3,834 –13,867 Translation adjustment on cash and cash equivalents –483 –595Changes in cash and cash equivalent 13,639 –6,289 Cash and cash equivalent at 1 January 37,307 38,264Cash and cash equivalent at 30 June 50,946 31,975

21CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

1.5 Consolidated statement of changes in equity

in thousands CHFShare

capitalShare

premiumReserve for own shares

Translation reserve

Retained earnings

Total equity

Balance at 1 January 2017 854 7,184 –1,914 –55,083 282,044 233,085Result 15,275 15,275Other comprehensive income, net of taxes –2,605 –2,605Comprehensive income –2,605 15,275 12,670Share-based payments 710 1,530 2,240Purchase of own shares incl. tax effects –3,181 –3,181Dividends –13,619 –13,619Balance at 30 June 2017 854 7,894 –3,565 –57,688 283,700 231,195Balance at 31 December 2017 854 7,902 –8,695 –46,221 307,840 261,680Result 18,563 18,563Other comprehensive income, net of taxes –1,043 –1,043Comprehensive income –1,043 18,563 17,520Share-based payments 259 1,302 1,561Purchase of own shares incl. tax effects –6,637 –6,637Dividends –13,977 –13,977Balance at 30 June 2018 854 8,161 –14,030 –47,264 312,426 260,147

22 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS


2.1 Basis of the consolidated financial statements

Convention of preparationThe condensed, unaudited consolidated interim financial statements at 30 June 2018 have been prepared in accordance with IAS 34 (“interim period”) and are based on the uniform financial statements of Interroll Holding LTD. and its subsidiaries (“the Group”). All statements are prepared based on uniform Group accounting principles. These interim statements reflect an update of previously pub-lished information. Therefore, they should always be read in conjunction with the Annual Report 2017. The interim statements were approved by the Board of Directors on 25 July 2018.

The accounting standards used for these interim financial statements are identical to those published and described in the Annual Report 2017 with the exception of IFRS 15 and IFRS 9.

The Group has applied IFRS 15 using the modified retrospective approach and therefore the comparative information has not been restated and is disclosed as under IAS 18 and IAS 11. The details of accounting policies under IAS 18 and IAS 11 are disclosed separately if they are different from those under IFFRS 15. The impact of changes is not material.

Revenue is measured based on the consideration specified in a contract with a customer where it acts as principal and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control over a product or service to a customer. On the one side performance obligations for products are typically satisfied on shipment or delivery (depending on agreed Inco terms). On the other side performance obligations for projects like sorters are typically satisfied after installation on site on final approval by the customer (according to the contract specifications). Orders are recognised at a point of time except for a few contracts in a specific location which are immaterial for the group. The contracts don’t comprise multiple performance obligations. The company has also assessed if there is a need to combine contracts for accounting purpose and made the conclusion that there is no need. As well there are no significant finance components considered as contracts are usually satisfied in less than 1 year. On these grounds Interroll uses the practical expedient 129.

Performance obligations for services are typically satisfied when the service is rendered. Maintenance or support level agreements cov-ering a certain period are the exception so far. Such maintenance contracts are recognized over time. Variable considerations exist but are very limited. Customers outreaching certain buying volumes are entitled for refunds. Variable consideration contracts are therefore assessed periodically. Any likely refunds are promptly considered in revenue recognition as reduction of revenue. Variable consideration is only recognised if it is highly probable that revenue will not be reversed. Provided warranties are limited to assurance warranty that covers the compliance of a product with agreed-on specifications. The company does not offer service warranties.

In the comparative period, revenue was measured at the fair value of the consideration received or receivable. Revenue from sales of goods was generally recognised upon delivery to the customer (transfer of risks and use), recovery of the consideration was probable, there was no continuing management involvement with the goods and the amount of revenue could be measured reliably. Revenue from sales of projects was generally recognised after installation on site on final approval by the customer (according to the contract specifi-cations). Revenue from rendering services in direct relation to its core products sold were recognised upon delivery.

The description of the principle activities from which the Group generates its revenue can be found in chapter “product groups”.

The introduction/amendment of IFRS 9 has no significant impact on the consolidated financial statement. The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. Trade receivables are written off when there is no reasonable expectation of recovery. Indcators that there is no reasonable expectation of recovery include, among others, the failure of a debtor to engage in a repayment plan with the group, and a failure to make contractual payments for a period greater than 90 days past due.


Foreign currency translationThe following key exchange rates were used for the translation of financial statements denominated in foreign currencies:

New or amended IAS / IFRS standards and interpretationsThe IASB has published new and revised standards and interpretations. These come into force on or later than 1 January 2019 and are not early adopted in this financial statement.

IFRS 16 (leasing) will be implemented as per 1st of January 2019. The group is currently assessing the impact.

Various amendments will also come into force, which will have no significant impacts on the consolidated financial statements of the Interroll Group: IFRS 2 (Share-based Payment), IFRS 4 (Insurance Contracts), IFRS 10 (Consolidated Financial Statements), IAS 28 (Investments in Associates and Joint Ventures), IAS 40 (Investment Property), the Annual improvements 2014-16, IFRIC 22 (Foreign Currency Transactions and Advance Consideration) and IFRIC 23 (Uncertainty over Income Tax Treatments). Critical accounting estimates and judgementsThe preparation of the consolidated interim financial statements requires management to make estimates, assumptions and judgements for the determination of income, expenses, assets, liabilities and for the disclosure of contingent liabilities. Such estimates, which are based on management’s best knowledge and belief at the reporting date, may deviate from actual circumstances. In such a case, they will be modified as appropriate in the period in which the circumstances change.

Segment reportingThe Interroll Group consists of one single business unit. The complete product range is sold in all markets through the respective regional sales organisation. The customer groups of OEMs, system integrators and end users are provided with tailor-made product offerings and differentiated consulting levels. The Interroll manufacturing units focus on the production of specific product ranges. Assembly units receive semi-finished products from the manufacturing units and assemble a wide product range to serve their local markets. The Interroll Research Center, which is centrally located, develops new application techno logies and new products for all product groups. Centers of Excellence, which focus on specific product groups, concentrate on the development of their assigned product portfolio. Group Management and the whole Interroll management structure are organised by function (Overall Management, Products & Technology, Global Sales & Services, Marketing and Finance). The Board of Directors bases its financial management of the Group on both the sales generated in the product groups and geographical markets as well as on the consolidated financial statements. Group Management additionally assesses the achievement of financial and qualitative targets of all legal entities.

Financial instrumentsInterroll Group has only financial instruments classified as hierarchy 2 in line with IFRS 13. These financial instruments include only foreign currency forward contracts and cash flow hedges. The valuation in hierarchy 2 is based on factors which cannot be tracked to actively listed prices on public markets. Instead, they can be monitored directly (as a price) or indirectly (as a derivative of the price). The amount of the financial instruments classified as hierarchy 2 is CHF 0.1 million at 30 June 2018 (31 December 2017: CHF –0.1 million).

The Group also has a number of financial instruments which are not measured at fair value in the balance sheet. For the majority of these instruments, the fair values are not materially different to their current amounts.

Income statement (average rates)

Balance sheet (Year end rates)

Jan.–Jun. 2018

Jan.–Jun. 2017

Change in %

30.06.2018

31.12.2017

1 EUR 1.167 1.078 8.2 1.157 1.1701 USD 0.967 0.986 –2.0 0.992 0.9761 CNY 0.152 0.144 5.4 0.150 0.150


2.2 Segment information

Net sales by geographical marketsSales by geographical market is presented as follows:

Material sales with specific customersSales are realised with more than 14,000 active customers. No customer accounts for net sales of more than ten percent of Group sales.

Sales by product groupSales realised in the first half-year by product group is presented as follows:

in thousands CHF



Germany 35,845 14.9 25,612 12.6 Other Europe, Middle East, Africa 110,302 45.8 99,203 48.8 Total Europe, Middle East, Africa 146,147 60.7 124,815 61.4 USA 54,299 22.6 42,395 20.9 Other Americas 9,603 4.0 14,011 6.9 Total Americas 63,902 26.6 56,406 27.8 Asia incl. Australia 30,686 12.7 22,055 10.8 Total Asia-Pacific 30,686 12.7 22,055 10.8 Total Group 240,734 100.0 203,276 100.0

in thousands CHF

Jan. – Jun. 2018 in %

Jan. – Jun. 2017 in %

Drives 84,458 35.1 71,658 35.3 Rollers 54,720 22.7 53,507 26.3 Conveyors & Sorters 71,401 29.7 51,069 25.1 Pallet & Carton Flow 30,155 12.5 27,042 13.3 Total Group 240,734 100.0 203,276 100.0


2.3 Notes to the consolidated statement of financial position

Consolidated statement of financial position Total assets increased by CHF 42.4 million compared to year-end 2017. Work in progress as part of inventories increased to a record level, while accounts receivable decreased. This development shows the strong project growth of the Interroll Group in the first half of 2018. Current liabilities increased by CHF 39.6 million to CHF 116.8 million. Net working capital decreased by CHF 1.0 million to CHF 87.7 million.

Investments / capital expendituresA total of CHF 15.6 million in gross capital expenditures were invested in various production facilities, however mainly in Hiram/Atlanta, USA and Phan Thong (Bangkok area), Thailand. Total non-current assets reached CHF 159.3 million. Capital expenditure into intangible assets are mainly for the further development of the SAP ERP system.

In line with IAS 36, goodwill and other intangible assets are subject to an annual impairment test. These tests are normally performed in the second half of the year. Currently, there is no indication of impairment.

Net financial assetsNet financial assets at the end of the reporting period decreased by CHF 3.2 million compared to year-end 2017 and reached CHF 33.9 million by 30 June 2018.

Total credit lines available but unused at the end of the reporting period amount to CHF 61.4 million (end of 2016: CHF 78.6 million). From these credit lines, CHF 40.0 million are committed until first half 2021.

Debt covenants have always been complied with during the reported interim period as well as during the previous-year period.

EquityThe equity position decreased by CHF 1.5 million to CHF 260.1 million compared to the end of 2017, mainly as a result of the higher dividend payment and a higher position of own shares. The equity ratio at the end of the interim period corresponds to 65.4 % (year-end 2017: 73.6 %). In mid-2018, a dividend of CHF 16.50 per share was paid as agreed during the annual general meeting (previous year: CHF 16.00 per share).


2.4 Notes to the consolidated income statement

Net salesNet sales in the reporting currency have increased organically by 18.4 % to CHF 240.7 million compared to the same period last year. In local currencies the increase reached 13.4 %. All regions and all product groups have contributed to this positive development.

Earnings before interest and taxes (EBIT)Despite higher expenses for research and development Interroll increased the EBITDA by 19.8 % to CHF 35.5 million (previous year: CHF 29.6 million). The EBITDA margin was at 14.8 % (previous year: 14.6 %).Interroll is accelerating development and extension of products and services for the fast growing “Industry 4.0” trend.

The EBIT increased by 23.2 % and reached CHF 25.3 million (previous year: CHF 20.5 million) in the reporting period, The EBIT margin reached 10.5 % (previous year: 10.1 %). Depreciation increased and amortisation slightly increased compared to previous year. Financing resultThe net financial loss of CHF 0.7 million includes, apart from immaterial net financial interest income, mainly realised and unrealised foreign exchange losses. Due to its decentralised structure, the Interroll Group is generally not very highly exposed to currency fluctuations.

Income taxIncome tax expense is recognised based upon the best estimates of the weighted average annual income tax rate for the full financial year. The tax rate presented in the interim report generally contains tax recoveries / adjustment charges from previous years. It is also influenced by a differentiated assessment of future realisable losses carried forward. In the period under review, tax revenues resulting from previous periods amounted to CHF 0.6 million (previous year: tax charges of CHF 0.2 million).

ResultThe net profit increased by 21.5 % to CHF 18.6 million (previous year: CHF 15.3 million). The net profit margin reached 7.7 % (previous year: 7.5 %).


2.5 Notes to the consolidated statement of cash flows

Cash flow from operating activitiesCash flow from operating activities amounts to CHF 31.2 million (previous year: CHF 17.6 million).

Cash flow from investing activitiesTotal investments of CHF 15.6 million (previous year: CHF 9.7 million) mainly include the amendment of the Local Competence Center in Hiram/Atlanta, USA as well as the start up of the new construction of a Local Competence Center in Phan Thong (Bangkok area), Thailand. In the previous year investments mainly included the amendment of the Global Competence Center for Rollers in Wermels kirchen, Germany and the purchase of land reserves for the Local Competence Center for Belt Curves in Kronau, Germany.

Cash flow from financing activitiesIn the first half of 2018, dividends totalling CHF 14.0 million were paid out (previous year: CHF 13.6 million), which were financed by existing credit limits.

2.6 Notes to the consolidated statement of changes in equity

Share capitalThe shareholders’ capital of CHF 854,000 is unchanged compared to year-end 2017.

Assignment of sharesShares assigned to members of the management in the amount of CHF 1.3 million (previous year: CHF 1.5 million) were expensed.

3 FURTHER DISCLOSURES AND INFORMATION

Events after the balance sheet date, seasonalityThe Group did not identify any events after the closing date of the interim statements that would have a material effect on the presen-tation of its financial position as at 30 June 2018. There are no other facts which require disclosure according to IAS 34.

The industry in which the Group operates does not have significant seasonal variations. However, changes in the economical environ-ment could have an impact on the short-term profitability.

Contingent liabilitiesNo significant contingent liabilities were incurred in the reporting period.


Preliminary Annual Figures 2018 January 21Annual Press Conference and Annual Report 2018 March 22General Assembly May 3Half-Year Report 2019 August 5

CONTACT AND IMPRINTIf you have any questions regarding Interroll Group or would like to be included in our distribution list, please contact the Investor Relations Team:

[email protected]

Martin RegnetGlobal PR ManagerTel: +41 91 850 25 21E-mail: [email protected]

EditorInterroll Holding AGVia Gorelle 36592 Sant’Antonino, SwitzerlandTel: +41 91 8502525Fax: +41 91 8502505www.interroll.com

FINANCIAL CALENDAR 2019

FINANCIAL CALENDAR 2019


NOTE ON THE HALF-YEAR REPORTThis half-year report is also available in German. If there are differences between the two, the German version takes priority. The half-year report is available as a PDF document.

NOTE ON ROUNDINGPlease note that slight differences may arise as a result of the use of rounded amounts and percentages.

FORWARD-LOOKING STATEMENTSThis half-year report contains certain forward-looking statements. Forward-looking statements include all state-ments which do not relate to historical facts and events and contain forward-looking expressions such as “believe”, “estimate”, “assume”, “expect”, “forecast”, “intend”, “could” or “should” or expressions of a similar kind. Such forward-looking statements are subject to risks and uncertainties since they relate to future events and are based on the company’s current assumptions, which may not take place in the future or be fulfilled as expected. The com-pany points out that such forward-looking statements provide no guarantee for the future and that the actual events including the financial position and profitability of the Interroll Group and developments in the economic and regulatory fundamentals may vary substantially (particularly on the down side) from those explicitly or im-plicitly assumed in these statements. Even if the actual assets for the Interroll Group, including its financial position and profitability and the economic and regulatory fundamentals, are in accordance with such forward-looking statements in this half-year report, no guarantee can be given that this will continue to be the case in the future.

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